SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q



                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


        For the Quarter Ended                            Commission File Number
          December 31, 1997                                       0-19516


                    SUNRISE INTERNATIONAL LEASING CORPORATION
             (Exact name of registrant as specified in its charter)


              DELAWARE                                       41-1632858
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                        5500 Wayzata Boulevard, Suite 725
                         Golden Valley, Minnesota 55416
                    (Address of principal executive offices)

               Registrant's telephone number, including area code
                                 (612) 593-1904


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                 Yes          X              No


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

    7,787,796 shares of Common Stock,  $.01 par value as of January 30, 1998.





<PAGE>


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
          Included herein is the following unaudited financial information:

          Consolidated  Balance  Sheets as of  December  31,  1997 and March 31,
          1997.

          Consolidated  Statements of Operations  for three month and nine month
          periods ended December 31, 1997 and 1996.

          Consolidated Statements of Cash Flows for the nine month periods ended
          December 31, 1997 and 1996.

          Notes to Consolidated Financial Statements.


<PAGE>

SUNRISE INTERNATIONAL LEASING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                        December 31,     March 31,
                                                                            1997           1997
                                                                        ------------   ------------
                                                                        (Unaudited)
<S>                                                                     <C>            <C>
ASSETS
   Cash and cash equivalents                                            $  1,748,000   $  2,191,000
   Accounts receivable, less
     allowance for doubtful accounts
     of $286,000 and $494,000                                              2,282,000      1,928,000
   Income taxes receivable                                                      --        1,245,000
   Inventory held for sale                                                   239,000        388,000
   Loans receivable, less allowance
     for possible losses of $995,000
     and $3,401,000                                                        4,520,000      7,503,000

   Investment in leasing operations:
     Direct financing leases                                              32,294,000     46,759,000
     Operating leases, less accumulated depreciation of
       $25,822,000 and $22,973,000                                        51,297,000     42,211,000
     Equipment held for lease                                              3,879,000      6,435,000
      Initial direct costs                                                   549,000        590,000
                                                                        ------------   ------------
       Total investment in leasing operations                             88,019,000     95,995,000
                                                                        ------------   ------------
   Furniture and fixtures, less accumulated
     depreciation of $662,000 and $535,000                                   381,000        411,000
   Other assets                                                            3,270,000      1,498,000
                                                                        ------------   ------------
       Total Assets                                                     $100,459,000   $111,159,000
                                                                        ============   ============
LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
   Financing arrangements:
     Notes payable                                                      $ 20,270,000   $ 13,329,000
     Securitized borrowings                                                6,217,000     15,481,000
     Recourse participations in loans receivable                                --          435,000
     Discounted lease rentals                                             31,215,000     40,198,000
                                                                        ------------   ------------
       Total financing arrangements                                       57,702,000     69,443,000
                                                                        ------------   ------------
Accounts payable                                                           4,199,000      6,808,000
   Accrued liabilities                                                     3,334,000      6,252,000
   Accrued income taxes                                                    1,849,000           --
   Deferred tax liability                                                  1,899,000      1,899,000
                                                                        ------------   ------------
       Total Liabilities                                                  68,983,000     84,402,000
                                                                        ------------   ------------
COMMITMENTS AND CONTINGENCIES (Note 6)

SHAREHOLDERS' EQUITY
   Common stock, $.01 par value, 17,500,000
     shares authorized, 7,788,000 and 7,189,000
     shares issued and outstanding, respectively                              78,000         72,000
   Capital stock, undesignated, $.01 par value,
     2,500,000 shares authorized, none issued or outstanding                    --             --
   Additional paid-in capital                                             27,643,000     25,601,000
   Retained earnings                                                       3,755,000      1,084,000
                                                                        ------------   ------------
       Total Shareholders' Equity                                         31,476,000     26,757,000
                                                                        ------------   ------------
       Total Liabilities and Shareholders' Equity                       $100,459,000   $111,159,000
                                                                        ============   ============
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.

<PAGE>


SUNRISE INTERNATIONAL LEASING CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                Three Months              Nine Months
                                             Ended December 31,         Ended December 31,
                                         -------------------------   -------------------------
                                            1997           1996         1997          1996
                                         -----------   -----------   -----------   -----------

<S>                                      <C>           <C>           <C>           <C>
REVENUES
   Operating leases                      $ 8,826,000   $ 7,205,000   $25,062,000   $19,071,000
   Direct financing leases                 1,134,000     1,790,000     3,811,000     6,011,000
   Equipment sales                         3,338,000     2,067,000     6,759,000     6,868,000
   Interest income                            46,000       168,000       183,000       565,000
   Fee income                                168,000        64,000       450,000       187,000
                                         -----------   -----------   -----------   -----------
     Total Revenues                       13,512,000    11,294,000    36,265,000    32,702,000
                                         -----------   -----------   -----------   -----------

COSTS AND EXPENSES
   Depreciation                            5,246,000     4,066,000    14,199,000    10,904,000
   Interest expense                        1,350,000     1,797,000     4,236,000     5,110,000
   Provision for lease and loan losses       280,000       206,000       895,000       632,000
   Cost of equipment sold                  3,142,000     1,924,000     6,599,000     5,990,000
   Compensation expense                    1,160,000       876,000     2,995,000     2,659,000
   Other operating expenses                  733,000       785,000     2,212,000     1,886,000
                                         -----------   -----------   -----------   -----------
     Total Costs and Expenses             11,911,000     9,654,000    31,136,000    27,181,000
                                         -----------   -----------   -----------   -----------

INCOME FROM OPERATIONS
   BEFORE PROVISION
   FOR INCOME TAXES                        1,601,000     1,640,000     5,128,000     5,521,000

PROVISION FOR INCOME TAXES                   766,000       789,000     2,459,000     2,651,000
                                         -----------   -----------   -----------   -----------

NET INCOME                               $   835,000   $   851,000   $ 2,669,000   $ 2,870,000
                                         ===========   ===========   ===========   ===========


NET INCOME PER COMMON
   AND COMMON
   EQUIVALENT SHARE:
       Basic                             $      0.11   $      0.12   $      0.35   $      0.40
                                         ===========   ===========   ===========   ===========
       Fully Diluted                     $      0.11   $      0.12   $      0.35   $      0.40
                                         ===========   ===========   ===========   ===========

WEIGHTED AVERAGE NUMBER
   OF COMMON AND
   COMMON EQUIVALENT
   SHARES OUTSTANDING                      7,794,000     7,220,000     7,631,000     7,198,000
                                         ===========   ===========   ===========   ===========

</TABLE>

The accompanying notes to the consolidated  financial statements are an integral
part of these statements.


<PAGE>


SUNRISE INTERNATIONAL LEASING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                           Nine Months
                                                                                        Ended December 31,
                                                                                       1997             1996
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income                                                                         $  2,669,000    $  2,870,000
Adjustments to reconcile net income to net cash
      provided by operating activities:
    Provision for lease and loan losses                                                 895,000         632,000
    Depreciation and amortization                                                    15,044,000      10,947,000
    Change in operating assets and liabilities:
        Accounts receivable                                                            (710,000)           --
Income taxes receivable                                                               1,245,000       1,157,000
        Other assets                                                                     57,000        (368,000)
        Inventory held for sale                                                         149,000         (55,000)
        Accounts payable                                                             (2,609,000)      1,780,000
        Accrued liabilities                                                            (867,000)        113,000
        Accrued income taxes                                                          1,849,000       1,484,000
                                                                                   ------------    ------------
           NET CASH PROVIDED BY OPERATING
              ACTIVITIES                                                             17,722,000      19,476,000
                                                                                   ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of equipment for lease                                                 (25,866,000)    (32,262,000)
    Principal portion of direct financing leases collected                           18,754,000      19,970,000
    Investment in loans receivable                                                         --        (1,381,000)
    Principal portion of loans receivable collected                                     784,000       4,476,000
    Purchase of furniture and fixtures                                                  (96,000)        (21,000)
                                                                                   ------------    ------------
           NET CASH USED IN INVESTING ACTIVITIES                                     (6,424,000)     (9,218,000)
                                                                                   ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Borrowings on notes payable                                                      31,649,000      16,250,000
    Payments on notes payable                                                       (24,708,000)    (17,274,000)
    Proceeds from securitized borrowings                                                   --        13,000,000
    Payments on securitized borrowings                                               (9,264,000)     (1,685,000)
    Proceeds from discounted lease financing                                         10,327,000       8,363,000
Payments on discounted lease financing                                              (19,310,000)    (20,506,000)
    Payments on participations in loans receivable                                     (435,000)     (3,527,000)
    Proceeds from note payable to King Holding Corporation                                 --         1,955,000
    Payments on note payable to King Holding Corporation                                   --        (6,082,000)
                                                                                   ------------    ------------
           NET CASH USED IN FINANCING
              ACTIVITIES                                                            (11,741,000)     (9,506,000)
                                                                                   ------------    ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                              (443,000)        752,000

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                      2,191,000       1,629,000
                                                                                   ------------    ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $  1,748,000    $  2,381,000
                                                                                   ============    ============

SUPPLEMENTAL CASH FLOW INFORMATION
    Interest paid                                                                     2,368,000       2,900,000
    Income taxes paid (received)                                                       (655,000)         51,000
    Stock issued in arbitration settlement (See Note 6)                               2,022,000            --
    Commercial property acquired (see note 3)                                         2,109,000            --
</TABLE>

The accompanying notes to the consolidated  financial statements are an integral
part of these statements 



<PAGE>


SUNRISE INTERNATIONAL LEASING CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE AND NINE MONTH PERIODS ENDED DECEMBER 31, 1997 and 1996 (Unaudited)
--------------------------------------------------------------------------------

1.   ACCOUNTING POLICIES

     In the opinion of management, the accompanying financial statements contain
     all  adjustments  necessary  to present  fairly the  financial  position of
     Sunrise  International  Leasing  Corporation  (formerly  known  as  Sunrise
     Resources, Inc.) and Subsidiaries (the Company) as of December 31, 1997 and
     March 31, 1997 and the results of  operations  and cash flows for the three
     and nine months ended December 31, 1997 and 1996. All such  adjustments are
     of a normal and recurring nature.

     These  statements  should  be read in  conjunction  with  the  Notes to the
     Financial Statements and Management's  Discussion and Analysis contained in
     the  Company's  Annual  Report on Form 10-K for the fiscal year ended March
     31,  1997,  filed with the  Securities  and Exchange  Commission,  and with
     "Management's Discussion and Analysis of Financial Condition and Results of
     Operations"  appearing in this  quarterly  report.  Results for the interim
     periods are not  necessarily  indicative of sales trends or future  results
     and performance.

     During March 1997, the Financial  Accounting  Standards Board released SFAS
     No.  128,  Earnings  per Share,  which  requires  the  disclosure  of basic
     earnings  per share and fully  diluted  earnings  per  share.  The  Company
     adopted SFAS No. 128 as of December  31,  1997,  and it has had no material
     impact on the  financial  position  or the  results  of  operations  of the
     Company.

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
     Disclosures about Segments of an Enterprise and Related Information,  which
     will be effective  for the Company  beginning  April 1, 1998.  SFAS No. 131
     redefines how operating segments are determined and requires  disclosure of
     certain financial and descriptive  information about a company's  operating
     segments.  The  Company  has not  yet  completed  its  analysis  and  final
     determination of future reporting segments.

2.   INCOME TAXES

     Income tax expense has been provided based on management's  estimate of the
     annualized  effective  tax rate of 48% for the three and nine month periods
     ended December 31, 1997 and 1996.

3.   LOANS RECEIVABLE

      During the quarter  ended  December 31, 1997,  the Company  exercised  its
     redemption  rights and acquired  title to  commercial  property  serving as
     collateral  on a loan with a net book value of $2.1  million.  As a result,
     the asset (and related reserve of $2.5 million) has been  transferred  from
     loans receivable to other assets. The commercial property has been recorded
     at its estimated fair market value of $2.1 million. There was no additional
     provision for loan loss required as a result of this event.


<PAGE>

     Loans by Collateral Type

     The composition of the loans receivable portfolio by collateral type was as
follows:
<TABLE>
<CAPTION>
                                                                           December 31,      March 31,
                                                                               1997            1997
                                                                           ------------    ------------
<S>                                                                        <C>             <C>         
     Commercial loans, collateralized primarily by receivables             $       --      $    161,000
     Commercial loans, collateralized by equipment, marketable
       securities and other                                                   1,180,000       5,163,000
     Real estate loans                                                          350,000       1,038,000
     Non-accrual loans                                                        4,044,000       5,475,000
     Non-recourse participations                                                   --          (867,000)
                                                                           ------------    ------------
                                                                              5,574,000      10,970,000
     Less:
       Allowance for possible loan losses                                      (995,000)     (3,401,000)
       Unearned fees from loan origination                                      (59,000)        (66,000)
                                                                           ------------    ------------
                                                                           $  4,520,000    $  7,503,000
                                                                           ============    ============
</TABLE>

     Loan Portfolio Activity and Allowance for Possible Loan Losses

     As of  December  31,  1997 and  March  31,  1997,  the  Company's  recorded
     investment in impaired and other loans and the related valuation allowances
     was as follows:
<TABLE>
<CAPTION>
                                                     December 31, 1997                March 31, 1997
                                             ----------------   --------------   ------------    ------------
                                                 Recorded          Valuation       Recorded        Valuation
                                                Investment         Allowance      Investment      Allowance
<S>                                           <C>                <C>                       <C>             <C>
     Impaired loans -
       Nonaccrual                             $      3,820,000   $      770,000   $  5,250,000    $  3,176,000
       Other                                           225,000          225,000        225,000         225,000
     Performing loans                                1,529,000             --        6,362,000            --
     Nonrecourse participations                           --               --         (867,000)           --
                                              ----------------   --------------   ------------    ------------
                                              $      5,574,000   $      995,000   $ 10,970,000    $  3,401,000
                                              ================   ==============   ============    ============
</TABLE>

     The activity in the allowance for possible loan losses during the three and
     nine months ended December 31, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
                                                        Three Months                 Nine Months
                                                     Ended December 31,           Ended December 31,
                                                   1997            1996         1997           1996

<S>                                             <C>            <C>           <C>            <C>
         Balance, beginning of period           $ 3,461,000    $ 2,837,000   $ 3,401,000    $ 2,773,000
         Provisions for loan losses                  30,000         30,000        90,000         94,000
         Reserve associated
           with reclassified property            (2,496,000)          --      (2,496,000)          --
                                                -----------    -----------   -----------    -----------
         Balance, end of period                 $   995,000    $ 2,867,000   $   995,000    $ 2,867,000
                                                ===========    ===========   ===========    ===========
</TABLE>

4.   DISCOUNTED LEASE RENTALS

     Discounted lease rentals consist of the following:
                                       December 31,         March 31,
                                           1997                1997
                                      ---------------    ---------------

         Non-recourse                 $    26,621,000    $    30,761,000
         Recourse                           4,594,000          9,437,000
                                      ---------------    ---------------
                                      $    31,215,000    $    40,198,000
                                      ===============    ===============
<PAGE>

5.   FINANCING ARRANGEMENTS

     Lines of Credit

     The Company has a $25 million line of credit  facility  with a bank for use
     in its normal operations. Advances under this line of credit are subject to
     a borrowing base limitation of $25.0 million at December 31, 1997. The loan
     balance  outstanding as of December 31, 1997,  was $16.0 million.  Advances
     under  the  line  bear  interest  at  prime,  and  are   collateralized  by
     substantially all otherwise  unsecured assets of the Company.  This line of
     credit  facility  matured  on  September  30,  1997 and was  renewed  under
     identical terms for another twelve-month period ending September 30, 1998.

     This  credit  facility  requires   compliance  with  financial   covenants,
     including  the  maintenance  of  certain  liquidity  and net worth  ratios,
     prohibits  the payment of  dividends  and  requires  compliance  with other
     financial covenants.  As a result of charges taken in the fourth quarter of
     fiscal year 1997 for lease and loan losses and related events,  as of March
     31, 1997,  the Company did not meet certain  financial and other  covenants
     contained in credit agreements with certain lenders. With the assistance of
     King Management Corporation, a related party, the lenders have subsequently
     modified the financial covenants or waived the events of noncompliance.  As
     of December 31, 1997,  the Company is in compliance  with the revised terms
     of these agreements.

     Term Loan

     On May 16, 1997, Sunrise Leasing Corporation completed a $5,500,000 funding
     on a term loan with  National City Bank of  Minneapolis.  This term loan is
     secured by certain  leases of the Company.  These funds were used to reduce
     the debt  outstanding  under  the  Company's  bank  line of  credit.  As of
     December 31, 1997 the outstanding balance on this loan was $4.2 million.

     Securitization

     On October 31, 1996, the Company,  Sunrise  Leasing  Corporation  ("Sunrise
     Leasing") and Sunrise  Funding  Corporation I (a newly formed  wholly-owned
     special purpose subsidiary of Sunrise Leasing)("Sunrise  Funding"), entered
     into an agreement with a subsidiary of Dougherty Dawkins,  Inc. to place up
     to $20 million of notes issued by Sunrise Funding to private  institutional
     investors. Dougherty Dawkins, Inc. is an investment banking firm of which a
     former  director of the Company is Vice Chairman.  The notes are secured by
     certain leases  contributed  to Sunrise  Funding by Sunrise  Leasing.  This
     securitization  facility  was closed on November  8, 1996,  with an initial
     funding of $13,000,000  and a subsequent  advance of $7.0 million funded on
     January 31, 1997.


6.   COMMITMENTS AND CONTINGENCIES

     Litigation

     On June 17, 1997, a decision was released by the  arbitrator on proceedings
     against the Company  relating  to the  February  1995 merger of the Company
     with  The  P.J.  King   Companies,   Inc.  (d/b/a   International   Leasing
     Corporation)   ("ILC").   ILC  shareholders   were  denied  rescission  and
     reformation of the merger agreement as well as relief on five other claims.
     They were  however  granted  relief on one count of breach of warranty  and
     awarded  damages of  560,257  additional  shares of  Sunrise  International
     Leasing  Corporation  common stock. This award,  valued at $1,891,000,  was
     charged  as  an  expense  for  fiscal  1997.   Additionally,   certain  ILC
     shareholders  were awarded repayment of attorneys' fees payable in the form
     of 38,818 additional shares of Sunrise  International  Leasing  Corporation
     common stock.  This award valued at $131,000 was also charged as an expense
     for fiscal 1997.  These  proceedings  were conducted  under an agreement of
     binding  arbitration and therefore no further  disputes or settlements with
     the Company are expected to arise in connection with the merger agreement.


<PAGE>



7.    RELATED PARTY


     As of December 31, 1997 King Management,  a corporation which is controlled
     by Peter J. King,  Chairman  of the Board,  had  pursuant  to an  agreement
     entered into with the Company on June 16, 1997, purchased 113 leases with a
     cost of $2,864,000.

8.    SUBSEQUENT EVENT

     In early  January 1998, a vendor  program  lessee with leases having a book
     value of  approximately  $4.6 million as of December 31, 1997 was placed in
     default  because  the  lessee  had failed to make  payments  when due.  The
     Company  is  currently  negotiating  with  the  lessee  and the  vendor  to
     restructure  the  lease   transactions.   The  Company   anticipates  these
     negotiations will be completed during the fourth quarter of fiscal 1998. At
     this point in time, it is not possible to determine  what,  if any,  impact
     the  ultimate  resolution  of  this  matter  will  have  on  the  financial
     statements.

<PAGE>



ITEM 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

Revenues

The Company classifies its lease  transactions,  as required by the Statement of
Financial Accounting Standards No. 13 ("FASB 13"), as either direct financing or
operating leases. Revenue, costs and resulting income are recognized during each
of the accounting periods during the term of the lease. The allocation of income
among the  accounting  periods  within a lease term will vary depending upon the
lease classification.

The  Company  segregates  the sources of its revenue  into five  categories  for
financial  statement  purposes:  (i)  operating  leases;  (ii) direct  financing
leases; (iii) sales of new and used equipment; (iv) fee income; and (v) interest
income.

Operating Leases.  All leases that are not classified as direct financing leases
are  treated  as  operating  leases.  Monthly  payments  from  these  leases are
recognized as leasing  revenue.  The Company's  cost of the leased  equipment is
recorded on the balance sheet and is depreciated on a  straight-line  basis over
the  lease  term to the  Company's  estimate  of  residual  value.  Revenue  and
depreciation  expense for operating  leases are recorded evenly over the term of
the lease.  If the lease is discounted to a financial  institution,  the related
interest  expense  declines  over the  term of the  lease  as the  principal  is
reduced,  with the  resultant net margin being lower in the early periods of the
lease and higher in the later periods.

Direct Financing  Leases.  These leases transfer  substantially all benefits and
risks of equipment  ownership to the lessee. A lease is a direct financing lease
if the creditworthiness of the customer and the collectibility of lease payments
are reasonably certain and it meets one of the following criteria: (i) the lease
transfers  ownership  of the  equipment  to the customer by the end of the lease
term; (ii) the lease contains a bargain purchase option; (iii) the lease term at
inception  is at  least  75% of  the  estimated  economic  life  of  the  leased
equipment;  or (iv) the present value of the minimum lease  payments is at least
90% of the fair value of the leased equipment at inception of the lease.

Direct financing leases consist of future lease payments plus the residual value
(collectively  referred  to as the "gross  investment").  Residual  value is the
estimated  fair market value at the time of lease  termination.  The  difference
between the gross investment in the lease and the cost (or carrying  amount,  if
different)  of the leased  equipment is recorded as unearned  revenue.  The "net
investment"  in the lease is the gross  investment  less unearned  revenue.  The
unearned  revenue is amortized to leasing revenue over the lease term to produce
a constant  percentage return on the net investment  whether or not the lease is
discounted to a financial institution.

Equipment Sales.  Revenue from equipment sales transactions is recognized by the
Company at the time title to the equipment  passes to the customer.  Leases that
entitle the customer to purchase the leased  equipment  for a nominal sum at the
end of the lease term and which are  discounted  on a  nonrecourse  basis at the
lease   commencement   date,  leaving  the  Company  with  no  interest  in  the
transaction, are treated by the Company as a sale of equipment.

Fee Income. Fee income consists principally of late fees charged on rental lease
payments  received  after  the  due  date  and  service  fees  received  for the
administration of transactions for the securitization  that began on November 1,
1996.

Interest Income. Interest income is accrued on unimpaired loans receivable under
the effective interest method.  Interest income is not recognized on loans which
have been identified by the Company as impaired.

Sunrise Financial Resources, Inc.

The Board of Directors made the  determination in fiscal 1996 to discontinue the
SFR  business.  The Company has sold the SFR  asset-based  lending  accounts and
one-half of its SFR commercial accounts.  Management believes the loan portfolio
is reflected at its estimated liquidation value as of December 31, 1997.


<PAGE>


Results of Operations  for the Three and Nine Months Ended December 31, 1997 and
1996

Total  revenue  increased  approximately  $2.2 million  (19.6%) and $3.6 million
(10.9%)  for  the  three  and  nine-month   periods  ended  December  31,  1997,
respectively,  as  compared to the  corresponding  periods in fiscal  1997.  The
majority of the revenue increase resulted from a $1.6 million (22.5%) and a $6.0
million (31.4%) increase in operating lease revenue for the three and nine-month
periods  ended  December  31,  1997,  respectively,  as compared to the previous
fiscal year.  The increase in operating  lease revenues was offset by a decrease
in direct  financing lease revenue of $656,000  (36.7%) and $2.2 million (36.6%)
for the three and nine-month periods ended December 31, 1997,  respectively,  as
compared to the corresponding  periods in fiscal 1997. The increase in operating
lease revenue and the decrease in direct financing lease revenue are a result of
the  Company's  continuing  effort to expand  and  focus on the  vendor  leasing
business. Operating lease revenue was, and will continue to be, affected by King
Management's  right to  participate  as lessor  in the  Company's  vendor  lease
programs. See Note 7 to Consolidated Financial Statements.

Total leasing revenues were as follows (dollar amounts in millions):
<TABLE>
<CAPTION>
                                                     Three Months                           Nine Months
                                                  Ended December 31,                     Ended December 31,
                                                 1997             1996                  1997              1996
                                            Amount    %       Amount    %           Amount    %      Amount   %
<S>                                         <C>       <C>     <C>       <C>         <C>       <C>    <C>      <C>
   Leasing Revenues:
         Vendor                             $   7.0   70%     $  5.5    61%         $  20.2   70%    $  14.3   57%
         Direct                                 3.0   30         3.5    39              8.7   30        10.7   43
                                            -------  ----     ------   ----         -------  ----    -------  ----
              Total                         $  10.0  100%     $  9.0   100%         $  28.9  100%    $  25.0  100%
                                            =======  ====     ======   ====         =======  ====    =======  ====

   As a percent of total revenues                73.7%             79.6%                 79.6%            76.7%
                                                 =====             =====                 =====            =====
</TABLE>

Margins from leasing activities  (leasing revenue less depreciation and interest
expense)  were  33.8% and 34.8% and 36.2% and 36.2% for the three and nine month
periods of fiscal 1998 and fiscal 1997,  respectively.  Margins  will  fluctuate
from  period to period  based  upon the mix of direct  financing  and  operating
leases and the  extent to which the  Company  finances  leases  with  internally
generated  funds.  Margins  will also be  affected  by the mix and age of direct
finance and operating leases in the current portfolio.

In order to limit the impact of any interest  rate  fluctuations  on its leasing
transactions,  the Company continually  monitors its lease rate factors relative
to  interest  rates on  borrowed  funds.  The lease rate  factors  are  adjusted
periodically  on new leases to  correspond  to any change in  interest  rates on
borrowed funds supporting the related transactions.

Revenue from equipment sales  increased $1.3 million for the three-month  period
ended  December  31,  1997 and  decreased  $109,000  for the  nine-month  period
December 31, 1997, as compared to the corresponding periods in fiscal 1997. This
overall  decrease is primarily a result of lower off-lease sales from the direct
customer  leasing  business.  The gross margins on equipment sales were 5.9% and
2.4% of sales  revenue  for the three and nine  month  periods  of fiscal  1998,
compared to 6.9% and 12.8% for the  corresponding  periods in fiscal 1997.  This
decrease in gross margins was specifically due to losses experienced on the sale
of off-lease  equipment  from the vendor  business.  While the Company is taking
steps to reduce these  losses,  it is expected  that gross  margins on equipment
sales will continue to be depressed for the foreseeable future.

Interest income  decreased  $122,000  (72.7%) and $382,000 (67.7%) for the three
and nine  month  periods  of  fiscal  1998,  respectively,  as  compared  to the
corresponding periods in fiscal 1997. This decrease was caused by the continuing
liquidation  of the SFR  loan  portfolio  which  coincided  with  the  Company's
decision to discontinue its commercial and asset-based lending services.

Fee income increased  $104,000  (163.6%) and $263,000 (140.3%) for the three and
nine month periods of fiscal 1998 as compared to the same period in fiscal 1997.
This  increase  is  due  to  the  additional  servicing  fees  received  on  the
securitization that began on November 1, 1996 and additional late fees.

Total costs and expenses increased $2.2 million (23.4%) and $4.0 million (14.6%)
for the  three  and  nine  month  periods  of  fiscal  1998 as  compared  to the
corresponding periods in fiscal 1997.
<PAGE>

Depreciation expense for the three and nine month period ended December 31, 1997
increased $1.2 million (29.0%) and $3.3 million (30.2%), respectively,  over the
same periods in fiscal 1997.  These  increases were due to an increase in vendor
equipment  leases as  depicted  in the above  table,  the  majority of which are
operating leases.

Interest expense  decreased  $447,000 (24.9%) and $874,000 (17.1%) for the three
and nine  month  periods  of  fiscal  1998,  respectively,  as  compared  to the
corresponding  periods in fiscal 1997. This decrease in interest  expense is due
to the reduction in outstanding principal balances on financing arrangements.

Cost of equipment sold increased $1.2 million  (63.3%) and $609,000  (10.2%) for
the three and nine month  periods of fiscal 1998,  respectively,  as compared to
the corresponding  periods in fiscal 1997. These increases were primarily due to
increased  sale activity in the direct  leasing  business  during the first nine
months of fiscal 1998.

Compensation  expense  increased  $284,000  (32.5%) and $336,000 (12.6%) for the
three and nine month periods ended December 31, 1997, respectively,  as compared
to the same  periods in fiscal  1997.  These  fluctuations  are due to  slightly
higher  compensation for the nine-month period in fiscal 1998, certain severance
amounts and some additional  commission expense on off-lease equipment sales and
month-to-month leases.

Other operating  expense  increased  $326,000  (17.3%) for the nine month period
ended December 31, 1997, as compared to the previous periods in fiscal 1997. The
majority of this increase was due to the  acceleration  of  amortization of some
capitalized funding expenses.

Income tax  provision as a percentage  of income before taxes was 48.0% for both
the three and nine month periods ended December 31, 1997 and 1996.

Liquidity and Capital Resources

General

The Company uses a combination of its credit lines,  other financing sources and
internally  generated  cash flows to finance the  acquisition  of equipment  for
lease.  Generally,  upon commencement of an end-user lease, the Company attempts
to assign the remaining  lease payment  stream to a financial  institution  on a
discounted,   nonrecourse   basis.  In  this  manner,  the  Company  finances  a
substantial  portion of the equipment cost on a long-term  basis and attempts to
limit its risk, if any, to its equity  investment in the loan or equipment.  The
discounted lease proceeds  received by the Company are used to reduce borrowings
under the credit lines.

At December  31, 1997,  the Company had total  borrowings  outstanding  of $57.7
million,  of which 46.1% were  nonrecourse.  At March 31, 1997,  the Company had
total borrowings outstanding of $69.4 million, of which 44.3% were nonrecourse.

As of  December  31,  1997,  the  Company  had a  total  investment  in  leasing
operations of $88.0 million, as compared to $96.0 million at March 31, 1997. The
decrease in  investment  in leasing  operations is due to the decrease in direct
finance leases as a result of the reduction of the direct customer  leases.  The
Company's  investment in leasing  operations  includes equipment held for lease,
which  consists of equipment for which a lease has been signed but which has not
yet commenced.  The amount of equipment held for lease fluctuates  significantly
depending on the dollar amounts and commencement dates of the Company's leases.

Net cash provided by operating  activities  was $17.7 million for the nine-month
period of fiscal 1998.  Increases in depreciation and  amortization,  which were
due to increases in the Company's operating lease portfolio, offset decreases of
$2.6  million in accounts  payable  and  $867,000  in accrued  liabilities.  The
Company expects to fund future requirements  through internally generated funds,
as well as  borrowings  under its lines of credit.  The Company  also expects to
realize additional cash from the future remarketing of leased equipment.

Equipment  expenditures  (net of  disposals) of $25.9 million for the nine month
period of fiscal 1998 were  financed  through  $15.6  million of cash flows from
operations,  through the  discounting  of $10.3 million of  noncancelable  lease
rentals to various financial  institutions at fixed rates and through the use of
the  Company's  lines  of  credit.  The  Company  does  not  have  any  material
commitments for capital expenditures, other than equipment held for lease.

Inflation has not been a significant  factor in the Company's business in any of
the periods presented.


<PAGE>

Liquidity and Financing Sources

As of December 31, 1997, the Company had available a $25 million line of credit.
Of this  amount,  $16.0  million  had been  utilized as of  December  31,  1997.
Advances under the line are collateralized by substantially all of the Company's
assets.  The  interest  rate is at prime,  and the Company is subject to certain
financial  and other  covenants  relating  to net  worth  ratios  and  liquidity
requirements.  The Company's line of credit matured as of September 30, 1997 and
was  renewed  under  identical  terms for another  twelve  month  period  ending
September 30, 1998.

This credit facility requires compliance with financial covenants, including the
maintenance of certain liquidity and net worth ratios,  prohibits the payment of
dividends and requires compliance with other financial covenants. As a result of
fourth  quarter  charges for lease and loans  losses and related  events,  as of
March 31, 1997, the Company did not meet certain  financial and other  covenants
contained  in  credit   agreements  with  certain  lenders.   The  lenders  have
subsequently   modified  the  financial   covenants  or  waived  the  events  of
noncompliance.  As of January 30, 1998,  the Company is in  compliance  with the
revised terms of these agreements.

During  the  first  quarter  of  fiscal  1998,  the  Company's  Sunrise  Leasing
Corporation  subsidiary entered into a Discretionary  Revolving Credit Agreement
with National City Bank of Minneapolis. The agreement provides for discretionary
loan advances up to $5.5 million based on eligible  equipment  leases.  Advances
under the agreement are secured by the eligible  equipment leases and are repaid
over the term, up to 48 months, of such eligible  equipment leases with interest
at 3.25% above the yield on U.S.  Treasury  securities of equivalent  term.  The
credit facility is also guaranteed by Sunrise International Leasing Corporation.
In May 1997, the Company borrowed $5.5 million under this credit  facility,  and
$4.2 million remains outstanding as of December 31, 1997.

Based on its projected cash flow from operations,  completion of the Securitized
Facility and its recent success in obtaining  additional  discount financing and
the commitment of King  Management  Corporation to assist the Company in meeting
its financing requirements, the Company believes that it will be able to finance
its anticipated equipment purchasing commitments in fiscal 1998.

The Company  continues to monitor several problem leases and loans.  While there
are  several  leases and loans  which  could  result in  additional  write-offs,
management does not currently  believe that any such write-offs,  other than the
accounts described below, would be material,  or that they would create covenant
violations  on  current  credit  facilities  or  otherwise  limit or reduce  the
Company's access to credit.

During fiscal 1997, a lessee,  operating under a previously  restructured  lease
and loan  agreement  had not  fulfilled  its  commitment to increase its monthly
payments from $159,000 to $199,000.  As a result of this continuing  default and
the lessee's requests to further restructure its payments,  the Company recorded
a reserve of $3,161,000 against this transaction in the fourth quarter of fiscal
1997. Due to jurisdictional  issues, the Company's claims against the assets and
collateral,  may be subject to prior  claims of the federal  government  and any
restructuring is subject to the approval of a federal  government  agency.  As a
result,  the  remaining  loan  balance of $9.2 million and the net book value of
$4.5 million continue to be significantly under collateralized. During the third
quarter the lessee stopped making its $159,000 monthly payments for November and
December,  and after  discussions  with  management  has resumed  making further
reduced  payments of $150,000  per month.  As of January 30, the lessee has made
payments totaling  $450,000.  While the Company believes that the lessee intends
to continue making the further reduced  monthly  payments of $150,000,  were the
lessee to cease making  payments and were the Company  unsuccessful in realizing
its collateral and asserting its claims under  guarantees,  the Company would be
required to write off some or all of the  remaining  book value ($4.5 million as
of  December  31,  1997).  This would have a  materially  adverse  affect on the
Company's financial  statements,  with impact to the Company's ability to comply
with certain loan  covenants and would impact the Company's  future cash flow by
the amount of the  remaining  payments  for the total  remaining  loan and lease
balance of $9.2 million.

As  described  above in  Paragraph  8 in the  Company's  Notes  to  Consolidated
Financial  Statements,  the Company is negotiating with a lessee and a vendor to
restructure $4.6 million of lease  transactions  which the Company has placed in
default.  The Company is not currently in a position to determine the impact, if
any, a resolution of this matter would have on its financial  statements.  There
is a risk, however, that the current nogiations will not be successful, in which
case the Company  financial  statements  and liquidity  could be materially  and
adversely affected.

<PAGE>

Outlook

The  statements   contained  in  this  Outlook  section  are  based  on  current
expectations  and are  subject to certain  risks and  uncertainties.  Certain of
these  statements are forward  looking and actual results may differ  materially
from  these.  The forward  looking  statements  contained  in this  Outlook,  in
particular  the  statements  regarding  growth of the Company's  vendor  leasing
business, the Company's ability to finance its business, and management's belief
that any future loan or lease write-off,  other than the two accounts described,
will not be material, involve a number of risks and uncertainties in addition to
the factors  discussed  above which  could cause  actual  results to differ from
those projected, including the following:

Highly   Competitive   Industry.   The  equipment  leasing  business  is  highly
competitive.  The Company competes with numerous  companies,  including  leasing
companies,  commercial  banks  and  financial  institutions,  some of which  the
Company relies on to obtain capital to finance its leases. Most of the Company's
competitors are significantly  larger and have  substantially  greater resources
than the Company. Because of its relative lack of capital, the Company typically
chooses not to compete with  significant  leasing  companies for those leases in
which the cost of the  equipment  greatly  exceeds  the  amount  of  nonrecourse
financing available.

Future Growth.  The Company's ability to grow at an acceptable rate is dependent
to a great  extent  on the  expansion  of its  vendor  leasing  programs.  As of
December 31, 1997, the Company has a total of 12 vendor leasing programs, two of
which are  significant.  While  the  Company  believes  it has the  ability  and
capacity to develop other large vendor leasing  programs,  there is no assurance
that it will be  successful  in this  regard or that it will be able to generate
acceptable revenue growth.

Risk of Additional Loan and Lease  Write-Offs.  While the Company  believes that
its current reserves are adequate, it continues to monitor closely several loans
and leases,  including a significant loan and lease currently in default,  as to
which the Company  has a book value of $4.5  million as of  December  31,  1997.
There is no assurance that such loans or leases will not go into default or that
they are adequately secured.  Any future losses on such loans and lease incurred
in excess of the Company's reserves would likely materially affect the Company's
future earnings and cash flows, and will cause the Company to be in violation of
one or more of its  covenants  under its credit  agreements  with its  financing
sources. See "Liquidity and Financing Sources".

Financing.  The  Company's  growth and  profitability  are  dependent to a great
extent on the willingness of banks and other financial  institutions to lend the
Company  money to finance the purchase of equipment to be leased.  To date,  the
Company has financed  its  equipment  and vendor  leasing  businesses  primarily
through the sale of equity to the public, cash flow from operations,  bank lines
of credit,  non-recourse  discount  lease  financing,  recourse  discount  lease
financing  and  a  securitization  of  certain  lease  receivables  and  related
residuals.  The  Company  normally  seeks  to fund  its  end  user  leases  with
non-recourse  discount  financing.  There is no  assurance  that  banks  will be
willing to continue to finance the Company's equipment leasing transactions on a
non-recourse  basis,  and any  adverse  change  in the  willingness  of banks to
finance the Company's lease  transactions  on a non-recourse  basis could affect
the Company's  future equipment  leasing  revenue.  The Company's vendor leasing
business to date has been financed  with  internally-generated  cash flow,  bank
lines of  credit  and a  significant  securitization  program.  Pursuant  to the
agreement  dated June 16, 1997 with Peter J. King,  King Management has provided
assurances  that funding will be made available for all approved vendor programs
for the two year period ending June 15, 1999. If necessary King  Management will
provide  subordinated  debt financing,  direct  financing and/or other financial
assistance to the Company to assure this financing availability.

Credit Risk. A significant  portion of the Company's total investments in leases
and loans  receivables are with customers who are considered highly leveraged or
with cash flows from  operations  inadequate  to service  existing  obligations.
Defaults by such customers could result in a significant loss to the Company, to
the extent such amounts are not already reserved.  In addition,  as these leases
and loans are funded internally or through recourse financing, the Company would
be  obligated  to  repay  the  remaining  principal  balance  to  the  financial
institution  out of internally  generated funds while receiving no cash payments
from the lessee/borrower  which would result in a significant  reduction in cash
flow.

<PAGE>

Significant Vendor  Concentration.  51.0% of the Company's total leasing revenue
for the period ended  December  31,1997 was  generated  through a single  vendor
leasing program.  Should this program  terminate,  the Company would continue to
realize  related  revenues  for a period of up to three years.  However,  if the
Company  were  unable  to  replace  this lost  business,  the  Company's  future
financial results could be materially and adversely affected.

Residual Values of Leased Equipment. At the inception of each lease, the Company
estimates  the residual  value of the leased  equipment,  which is the estimated
market  value  of the  equipment  at the end of the  initial  lease  term.  This
estimated  residual value represents a significant  portion of the investment in
operating  leases.  The actual realized  residual value of leased  equipment may
differ from its estimated  residual value,  resulting in profit or loss when the
leased  equipment is sold or leased again at the end of the initial  lease term.
If a lessee  defaults on a lease which has been  discounted  by the Company to a
financial  institution,  the financial institution may foreclose on its security
interest in the leased  equipment and the Company may not realize any portion of
such residual value. In addition,  data processing equipment is subject to rapid
technological  obsolescence  typical of the computer industry.  Historically the
Company's  experience has generally resulted in actual residual values in excess
of estimated  residual values.  However during the current fiscal year operating
results  have  been  lower due to losses  experienced  on the sale of  off-lease
equipment from its vendor business.  While the company is taking steps to reduce
those losses, it is expected that gross margins on equipment sales will continue
to be depressed  for the  foreseeable  future.  Also,  a greater  than  expected
decrease in the market value of data processing or other equipment leased by the
Company could materially and adversely affect the Company's  financial condition
and profitability.


<PAGE>




PART II-OTHER INFORMATION
--------------------------------------------------------------------------------

ITEM 1.           Legal Proceedings - None.

ITEM 2.           Changes in Securities - None.

ITEM 3.           Defaults on Senior Securities - See Note 5 to Financial
                  Statements at Part I, Item 1, above.

ITEM 4.           Submission of Matters to a Vote of Security Holders - None.

ITEM 5.           Other Information - None



ITEM 6.           Exhibits and Reports on Form 8-K.

                  a.       Exhibits

                           See Exhibit Index immediately following the signature
                           page.

                  b.       Form 8-K

                           There have been no Current  Reports on Form 8-K filed
                           on behalf of the  Company  during the  quarter  ended
                           December 31, 1997.



<PAGE>


                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                     SUNRISE INTERNATIONAL LEASING CORPORATION



Date:   January 30, 1997             By: /s/ Errol Carlstrom
                                     Errol Carlstrom, President, Chief Executive
                                     Officer and Chief Financial Officer
                                     (principal executive officer and principal 
                                     financial officer)





                                      By: /s/ Paul R. Wotta
                                      Paul R. Wotta
                                      Controller (principal accounting officer)



<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           EXHIBIT INDEX TO FORM 10-Q


Commission File No.:  0-19516
For the quarter ended
December 31, 1997

-------------------------------------------------------------------------------
                    SUNRISE INTERNATIONAL LEASING CORPORATION


      Exhibit
      Number                  Description

     3.1  Certificate of  Incorporation  - incorporated by references to Exhibit
          3.1 to the  Company's  Quarterly  Report on Form 10-Q for the  quarter
          ended September 30, 1997

     3.2  Bylaws -  incorporated  by  references to Exhibit 3.2 to the Company's
          Quarterly Report on Form 10-Q for the quarter ended September 30, 1997

     4.1  Specimen of Common Stock  Certificate -  incorporated  by reference to
          Exhibit  4.1 to the  Company's  Quarterly  Report on Form 10-Q for the
          quarter ended September 30, 1997

     11.1 Per Share Earnings Computations

     27.0 Financial Data Schedule (filed with electronic version only)